Over the past 30 y the prevalence of overweight children (BMI>95th percentile) (6-19 y) in the USA has increased 3-fold to reach 15% in 2000. Concomitant with the increase in childhood overweight, the incidence of type 2 diabetes in children (0-19 y) has increased 4-fold (to account for ~30% of newly diagnosed diabetes). There is a predominance of both obesity and type 2 diabetes in African American and Hispanic adolescents. The rapid increase in obesity and type 2 diabetes in children and adolescents is a major public health concern necessitating effective strategies for treatment and prevention. Exercise is a potentially valuable tool in this battle. Understanding the physiology of the metabolic effects of obesity and the effects of interventions e.g. exercise on glucose metabolism and insulin sensitivity in obese adolescents is a prerequisite in defining strategies for preventing insulin resistance and impaired glucose metabolism, and the development of type 2 diabetes. In this proposal we will use state of the art stable isotope and MRI techniques to measure insulin sensitivity, gluconeogenesis and intracellular fat content in muscle and liver. We will study 96 adolescents of Hispanic heritage with a balanced distribution with regard to obesity/non-obesity and gender. Genetic admixture will be determined using a panel of 35 markers appropriate to determine the proportion of European vs. Indigenous heritage in a Hispanic population. The subjects will be studied prior to a formalized exercise program and after 12 wks of the program. We will determine whether 1) obesity related decrease in insulin sensitivity and increase in gluconeogenesis are associated with increased intracellular fat accumulation in muscle and liver; 2) a formalized exercise program will improve insulin sensitivity and reduce gluconeogenesis; 3) changes in intramyocellular and/or intrahepatic fat are 1 likely mechanisms for exercise induced metabolic improvements; 4) genetic admixture in itself has an impact on insulin sensitivity and gluconeogenesis when the effects of obesity have been taken into account; 5) plasma concentrations of the fat derived protein adiponectin is a robust marker of intracellular fat in muscle and liver. Thus, the information that can be gained by the proposed studies will increase our understanding of the physiological factors leading to insulin resistance and disturbed glucose metabolism in Hispanic obese adolescents, and the mechanisms for exercise induced metabolic effects. This information is likely to lead to identifying factors and potentially new strategies to prevent and/or delay the onset of type 2 diabetes in adolescents.